Western Real Estate Business magazine covers the multifamily, retail, office, healthcare, industrial and hospitality sectors in the Western United States.
Issue link: https://westernrealestatebusiness.epubxp.com/i/818922
www.REBusinessOnline.com Western Real Estate Business • May 2017 • 55 ly's Total Fitness), has seen the pro- liferation of small players targeting particular industry trends. Operating in smaller footprints, concepts such as Orangetheory, CycleBar, Corepow- er Yoga and CrossFit are not just in- dustry leaders, but desirable tenants that can drive significant traffic to a shopping center. A similar trend is noticeable in retail dining. Although traditional sit-down restaurants are still common, new, fast-casual con- cepts have exploded in popularity. Chipotle, Smashburger, Panera and Modmarket are just some examples of smaller restaurant concepts catering to the fast-paced lifestyle of modern consumers. New fitness studios and fast-ca- sual dining are just two examples of emerging tenant trends, and land- lords should think prospectively about future tenants that may become desirable at their shopping centers. In terms of lease negotiation and draft- ing, landlords should ensure they are not hamstrung by long lists of prohib- ited uses to accommodate attractive future operators. A prohibition on "health clubs," for example, which is found in many leases and declarations recorded against shopping centers, may be problematic. Traditionally included in declarations and leases because of parking concerns, this pro- hibition (without the carve-outs rec- ommended below) would prevent a landlord from leasing to the smaller gym operators identified above, de- spite the fact their operations (e.g., small class sizes) do not pose the same parking risk. To mitigate the concern that an overbroad prohibited use could stifle future leasing to attractive tenants, landlords are advised to negotiate reasonable exceptions. For example, a landlord could limit the application of the prohibition on health clubs to those "in excess of 15,000 square feet." This sensible carve-out mitigates the tenant's concern that a large gym will attract a high volume of traffic at peak hours, while maintaining the landlord's flexibility to bring new and exciting fitness operators to shopping centers. It is only by maintaining flexibility over future leasing that landlords can respond to emerging tenant trends like the proliferation of smaller op- erators. To make sure they can re- spond to changing market dynamics, landlords should ensure they have competent representation to admin- ister complex leasing regimes and respond to foreseeable issues dur- ing lease negotiation. By focusing on flexibility at the drafting stage, a landlord can protect its investment in a shopping center by ensuring an at- tractive future tenant mix and stable rent stream. CALIFORNIA SUPREME COURT TAKES UP MEDICAL MARIJUANA CEQA CASE By Ed Grutzmacher, Of Counsel, Meyers Nave in Oakland, Calif. The California Supreme Court has granted review in Union of Medical Marijuana Patients, Inc. v. City of San Di- ego, a case that will impact how devel- opers and owners should approach projects that involve new or changed zoning ordinances, particularly those that concentrate or shift property uses within a jurisdic- tion. The much-anticipated decision is expected to provide guidance on whether proposed new or changed zoning ordinances must first undergo California Environmental Quality Act (CEQA) review. The case also address- es a more narrow question specifically regarding the CEQA review of zoning activities that California municipali- ties are increasingly undertaking to regulate marijuana establishments af- ter the passage of Proposition 64. Under CEQA, local agencies must conduct some level of environmen- tal review of any decision that would constitute a "project." "Project" is de- fined under CEQA as an action that has the potential to result in either a direct physical change, or a reason- ably foreseeable indirect physical change to the environment. In this case, the City of San Diego adopted a zoning ordinance to allow up to 36 medical marijuana facilities to oper- ate throughout the city, with the uses spread out evenly through each of the city's nine City Council districts. The City conducted no CEQA review of the zoning ordinance, claiming that the ordinance was not a "project" un- der CEQA and, therefore, no CEQA review was required. The Union of Medical Marijuana Patients, Inc. ("UMMP"), a corpora- tion of medical cannabis associations and patients, objected, arguing that the ordinance would cause medical marijuana facilities to be established in new locations and cause patients to drive to these new locations, thereby causing at least some level of environ- mental impacts to traffic and air pol- lution. Therefore, UMMP concluded, San Diego should have conducted CEQA review. Be part of Arizona's fastest growing city. In 2000, Maricopa was home to 1,400 proud residents; today, it has grown to more than 49,000. Incorporated less than twelve years ago, City leaders have worked vigorously to provide a pro-business operating environment where businesses can thrive. Young and educated labor pool with 46% holding a bachelor's or advanced degree Family-oriented atmosphere that draws new residents and seasonal visitors Located between Phoenix and Tucson, with connections to U.S. and global markets Supply of developable properties with highway access and proximity to I-8 and I-10 Comprehensive incentive packages for impactful projects Grutzmacher